Monday, March 05, 2007

Calls of Note Part 2

Jefferies says they attented the SPIE conference in San Jose last, where they met with both equipment vendors involved in lithography, and fab managers from IDMs and foundries, coming away with positive data points for ASML (NASDAQ:ASML). The net take from this was (1) chipmakers remain committed to existing CY07 spending plans with no signs of Capex push-out, (2) traction of Immersion tools may be slower than expected, as DRAM chipmakers look to utilise dry-lithography tools longer and (3) ASML's product roadmap in-tune with customer requirements.

On the first point, firm spoke with key representatives from both leading memory chipmakers (DRAM and NAND) and foundry players. Despite weakening NAND and DRAM spot prices, memory chipmakers alluded that their mgmt remain committed to the current CY07 capex budget. In particular, Samsung, Hynix and Toshiba appear focused on fighting for DRAM and NAND market share. Amongst the foundries, TSMC's capex spend remains on track, as well as spending plans from the MPU chipmakers.

On the second point, firm does not expect to see any Immersion booking surprise in 1H:07. From their conversations, firm believes that DRAM chipmakers are likely to purchase dry 193nm-lithography tools rather than Immersion tools. This is because DRAM makers are unwilling to take the higher yield impact and higher maintenance costs associated with Immersion tools. In contrast, NAND makers will purchase Immersion, preferring the higher productivity gained from geometry shrinkage.

Notablecalls: Not actionable. While Jeffy came away with positive data points from the conference, the most important point seems to be lower than expected traction of Immersion tools. That may be perceived negatively for Cymer (NASDAQ:CYMI). One to keep an eye on.